Is WestJet undervalued and on a big upswing (WJA, Toronto)?

Question

I've held Westjet shares now for some time and noticed that they have started to move higher. A freind of mine mentioned that the institutional investors have taken note and that it will move higher. I picked up my shares at $10, it's very likely that they will head higher than $20 (their previous support level). People are travelling more now, WestJet is benefiting from fuel surcharges, and they just released some surprisingly strong earnings. What is a realistic price for me to sell at ?

Answer 1

I don't know that WJA is necessarily undervalued at this point. There is clearly uncertainty from investors as earnings have grown considerably in the last year while the market price continues to decline. WestJet's price per share is definitely on the upswing in recent months and may peak once again around $16-18 per share. Don't count on seeing prices spike above 2001 levels of $20.50 as WJA market cap is already upwards of $1.6 billion with a stabilized roe. Recent trend reports show travel to peak in 2008 before the next major downturn in the segment.

Answer 2

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Answer 3

Yes WJA is probably one of the best buys out there right now. Myself i would hold out for the mid $20's....it should be there by next spring. They are Canada's best value for air fares by far, and are expanding all the time. The main reason for the low share price lately has been the turnover of execs.....which isn't really an issue since their core business is sound. I would really suggest though that you buy quickly or you'll miss the current technical rally that should boost the stock by a couple dollars in the next few weeks.